Watchdog slams timid gas regulator

Senior MPs have slammed energy regulator Ofgem for taking too cautious a stance over the sell-off of four gas distribution networks.

12 January 2007

Senior MPs have slammed energy regulator Ofgem for taking too cautious a stance over the sell-off of four gas distribution networks.

In June 2005, in sales approved by Ofgem, the National Grid sold four of its eight regional gas distribution networks for £5.8bn. The regulator concluded that the sale was likely to save customers £325m in total between 2008 and 2023 – equivalent to £1 per customer per year – with the majority of these savings coming after 2013.

But a Public Accounts Committee report published on January 11 criticised Ofgem for its timidity. Chair Edward Leigh said: 'As gas prices go through the roof, Ofgem must do everything it can to get the best possible deal for consumers. Certainly, they cannot wait until after 2013 to enjoy most of the benefits of the sales.'

Leigh urged Ofgem to set bold price controls and to assume that efficiency savings of at least 3% can be achieved. Ofgem has estimated that there is the potential to save a further £830m, regardless of the sell-off.